Plague of Broken Contracts Frays Cotton Market

By

Michael Rothfeld and

Carolyn Cui

Aug. 30, 2012 10:36 p.m. ET

The market for cotton, one of the world's oldest commodities, has been roiled by rampant breaking of contracts by farmers and textile mills.

Over the past two years, cotton prices nearly tripled before they fell by almost two-thirds, triggering the broken deals. Both cotton growers and the overseas mills that spin cotton into yarn have walked away from previously signed agreements after prices turned against them.